Something for Nothing

The main street of the small town that I live in is about fourteen blocks long. I have counted about eight large bank buildings, each with attractive landscaping. This has led me to think: what are these banks making or providing that is so important that my little town needs eight of them on the main drag? Other than restaurants (food) they are easily the most numerous of any given type of business.

What are they making or producing or providing that improves the lives of the locals?

If you could view the economy of a city from above you would see a boiling pot: business that are making something, expanding quality of life, creating goods. The cobbler repairs shoes, the baker makes bread, the beautician cuts hair. Blue Table Painting paints figurines.

A bank could be seen more like a whirlpool, a vortex that serves to suck out the resources of the local community. Invisibly but efficiently.

I compare the process to that by which a fly eats. The fly barfs out stomach acid (credit) then sucks up both the acid and the now-goopified food matter (goods bought on credit).

Fractional reserve banking works like this: a bank gets $20,000 on deposit. It then puts that money "on reserve", a special deposit that banks make (I think with the Federal Reserve). It is then allowed to make $200,000 in loans.

It keeps on reserve a fraction of the loan, thus fractional reserve banking.

So, where did the extra $180,000 come from? It came from nowhere. No one invested it, no one saved it. It does not represent labor or goods.

Let's say the loan is made for someone to buy a house. That person then pays back the $200,000 with interest for a conservative payback amount of $300,000. Let's say further that person makes $60,000 a year. That means that he will spend more than four years doing nothing except working to pay the bank the invented part of the principle.

But what is the real exchange here? He will have traded four years of his life (non-refundable! the only asset any human has) for the initial deposit of $20,000.

If you default, the bank now gets the house. It owns the home outright. But what did it trade for the finished product?

Imagine every debt that you have reduced to one-tenth. That is the real money involved.

Think of it another way. A bank is allowed to take gold, mix in 90% lead and then go spend that as if it were gold. Plus get interest. Then when the bust comes, harvest the homes and goods of the citizenry. In a more fundamental way, a bank harvests your very life; like the Skexis from the Dark Crystal-- they are vulture-shaped husks that have to feed on the life essence of captured podlings.

I propose to you, dear reader, that this is a fraudulent exchange. It is legal. But I suggest to you that it is a monstrous fraud (by definition) done to nearly every citizen in this country. Every day.

There's more. It is this concept, coupled with central banking, that allows a government to debase the currency (mix in lead so to speak) and go to war without the real cost being revealed to the citizens until later. Central banking makes it much more likely that countries will go to war.

A $5000 car in 1975 now six times that amount thirty years later. How is that? Prices aren't going up. The value of the dollar is going down.

This is not conspiracy theory. It's a simple fact of everyday life. It is the foundation of our so-called financial system.

For my part, I am working at reducing the number of transactions I have with banks. I am approaching this from a consumer's point of view. I no longer wish to purchase a certain type of service from the bank.

I believe a more equitable way of doing things would be to require a 1:1 reserve ratio.

In recent years, the Treasury Secretary loosened these reserve limits. Some investment firms had 30:1 ratios or higher. Meaning they created out of thin air new debt (new money) at the rate of $300 for $3 on reserve.

Lastly, I would like to clarify, that I am only here being critical of ONE function of a bank: fractional reserve banking. I believe it is harmful. Banks provide other functions, eg the warehousing of valuables and the safe transfer of money (like Paypal). These are proper functions of banks. They can be good.



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